Wal-Mart's phenomenal
growth is the result of sweetheart deals and taxpayer subsidies. By Greg
LeRoy.

Wal-Mart,
the Alpha Dog of discount stores, has also become the Alpha Hog
at the public trough.

The phenomenal
growth of the world's largest corporation has been supported by
taxpayers in many states through economic development subsidies.
A Wal-Mart official once stated that the company seeks subsidies
in about a third of its stores, suggesting that more than 1,100
of its U.S. stores are subsidized. A national survey by Good Jobs
First in 2004 looked at 160 stores and all of the company's distribution
centers -- and found that more than 90 percent of them have been
subsidized. Altogether, 244 subsidized facilities in 35 states
received taxpayer deals of more than $1 billion.

The economic
impact of these subsidies on small businesses is given a human
face in one powerful segment of Robert Greenwald's new documentary,
"Wal-Mart: The High Cost of Low Price" (www.walmartmovie.com/?track=alternet).
The sweetheart deals given to two Wal-Mart Supercenters in Hamilton,
Missouri undermined Red Esry's four family-owned grocery stores.
Esry watched his sales plunge as soon as the Supercenters opened
-- he couldn't compete with Wal-Mart's prices and lost almost
half of his business virtually overnight.

In the film,
Esry's wife ruefully recounts how her husband went to City Hall
to ask for a property tax abatement to match Wal-Mart's subsidy,
but was turned down. Esry cut costs, but refused to stop paying
his employees a good wage and continued to provide them with full
health-care benefits and a pension package. Red Esry's story is
being played out in thousands of communities across America.

Wrong-headed
Subsidies

Giving subsidies
to suburban retailing is bad policy on many levels. The proliferation
of far-flung stores contributes to sprawl and its many problems:
undermining traditional downtown business districts and worsening
traffic jams and air quality. The diversion of tax dollars into
the coffers of developers and big retailers takes much-needed
revenues away from public schools and other services. The low-wage
jobs created in the malls do little to stimulate the economy and
actually serve as a drag, given that workers with McJobs need
more assistance from taxpayer-financed safety-net programs.

And because
of poor disclosure in most states, this could be just the tip
of the iceberg.

Of course,
the real force driving Wal-Mart's site location behavior is its
voracious appetite for more market share, not subsidies. The 2004
survey found cases in which the company had sought subsidies,
didn't get them, and still built new sites.

In Chula
Vista, California, a $1.9 million subsidy deal was successfully
challenged in court in 1998, after citizens complained that local
redevelopment agencies were awarding state money to big-box retailers
for projects with little benefit to the public. The Chula Vista
Wal-Mart ended up being built without public assistance.

In 2001,
voters in Galena, Illinois rejected a $1.5 million sales tax rebate
sought by the company for a planned Supercenter. Immediately after
the vote, Wal-Mart said it would drop the plan, but later decided
to move forward after getting the private seller of the land to
agree to a lower price. Wal-Mart also proceeded with the construction
of an unsubsidized Supercenter in Belvedere, Illinois, after its
request for a $1.5 million sales tax rebate was opposed by local
officials.

Such events
are especially controversial in TIF deals, since the governing
law often requires that the beneficiary of TIF affirm that the
project would not occur "but for" the subsidy.

According
to a report by 1000 Friends of Wisconsin, Wal-Mart admitted that
the TIF funding provided to a project in Baraboo did not meet
that requirement. The report also noted that the supposedly blighted
area chosen for the project consisted of a cornfield and an apple
orchard.

Public opposition
to subsidies for Wal-Mart has played a role in some successful
site battles.

In 2000,
voters in Olivette, Missouri, rejected a $36 million TIF proposal
for an 80-acre shopping center that was to be anchored by a Wal-Mart
and a Sam's Club. In 2002, Wal-Mart was rebuffed when it sought
an $18 million subsidy in connection with a project that was to
be located on the Near South Side of Chicago. According to a press
report, Mayor Richard M. Daley "guffawed" when presented with
the request. The project was abandoned.

Denver officials
dropped plans for a Supercenter project in 2004 that could have
involved as much as $25 million in public money. The plan was
controversial because of the subsidy and because it would have
used eminent domain to displace a group of Asian-American small
businesses. In 2004 voters in Scottsdale, Arizona voted resoundingly
against a plan to give a developer up to $36 million in sales-tax
rebates for a complex that was to include a Supercenter and a
Sam's Club.

Costs and
Benefits... or Costs and Costs?

Wal-Mart's
reaction to the 2004 survey of its reach into taxpayer subsidies
was classic bait and switch. The company responded by saying it
couldn't verify the figures, but that if they were correct, then
"it looks like offering tax incentives to Wal-Mart is a jackpot
investment for local governments."

Specifically,
the company claimed that over the past 10 years, it collected
$52 billion in sales taxes, remitted $192 million in income taxes,
wage withholdings and unemployment insurance, and paid $4 billion
in local property taxes. "Do the math and you will see that every
dollar invested returned more than thirty," the company summarized.

Of course
Wal-Mart "collected" sales taxes; as a retailer, it's required
by law to do so. But that's consumers' money, not the company's.
Wal-Mart is just a pass-through. And since much of its sales come
at the expense of other retailers, any gain is obviously offset
by lower sales taxes collected at competing stores -- and by the
taxpayer costs of abandoned downtowns and malls.

Of course
Wal-Mart "remitted" income and payroll taxes -- it's an employer,
and is required to deduct taxes from its workers' paychecks. But
income tax is not the company's money; it's money from the workers'
meager paychecks. And since Wal-Mart jobs are largely shifted
from other retailers and Wal-Mart pays so poorly, any net revenue
gain is unclear.

And, of course,
Wal-Mart paid some property taxes -- all property owners have
to support local services. Unless, of course, they get an abatement;
our study found more than 40 such instances. But Wal-Mart offered
no disclosure on how much in property taxes it hasn't paid. And
as economists point out, companies pass on the cost of property
taxes to customers as much as market conditions allow.

So there
you have Wal-Mart's version of cost-benefit analysis. Taxpayer
costs for economic development are balanced by "benefits" that
mostly consist of, well, workers' costs, consumers' costs and
taxpayers' costs.

It's ironic
that a company which promotes itself as a free enterprise success
story is so highly dependent on taxpayers. This fact was conveniently
forgotten during the aftermath of Hurricane Katrina, when Wal-Mart
garnered widespread accolades for its role in providing emergency
supplies to victims of the storm. Those truckloads of supplies
should be seen not as corporate charity, but as small bit of payback
for the huge sums the company has previously drained from taxpayers
of America.

Note: Greg
LeRoy is the author of "The Great American Jobs Scam: Corporate
Tax Dodging and the Myth of Job Creation" and executive director
of Good Jobs First (www.goodjobsfirst.org). For more information
about "Wal-Mart: The High Cost of Low Price," visit www.walmartmovie.com/?track=alternet.

HELP
US KEEP THE HEAT ON WAL-MART!

The
battle is on. Wal-Mart has created a "war room" in Bentonville,
Arkansas, filled with high-priced PR people to fight the
growing negative publicity about their policies. We're winning
-- but we need to keep the heat on.

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